UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) NOVEMBER 14, 2001
D'ANGELO BRANDS, INC.
(Exact name of registrant as specified in its charter)
Nevada 000-29477 87-0636386
- -----------------------------------------------------------
(State of (Commission (I.R.S. Employer
Organization) File Number) Identification No.)
pre-merger)
14 Brewster Court, Brampton, Ontario Canada L6T 5B7
- ----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(905) 794-0335
Registrant's telephone number, including area code
Playandwin, Inc.
7050 Weston Rd.
Vaughn, Ontario Canada L4L 8G7
(Former Name and/or Former Address, if Changed Since Last Report)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
On November 15, 2001, D'Angelo incorporated a wholly-owned
subsidiary named D'Angelo Acquisitions Inc., an Ontario
corporation, which entered into a Share Exchange Agreement with
D'Angelo Brands Ltd., an Ontario corporation. Pursuant to a Share
Exchange Agreement (the "Agreement"), dated November 14, 2001,
D'Angelo Brands, Inc. (formerly D'Angelo, Inc.), a Nevada
corporation (the "D'Angelo"), acquired 100% of the outstanding
shares of common stock ("Common Stock") of D'Angelo Brands Ltd.,
for a total of 36,000,000 Exchangeable Shares.
Stewart Garner has resigned as President of D'Angelo and Frank
D'Angelo, the current President of D'Angelo Brands Ltd., has been
appointed the new President in his place. Of the previous
directors of D'Angelo, Douglas McFadden has resigned while Mr.
Garner will remain on the board. Frank D'Angelo, Giuseppe
D'Angelo, T. Hurdman and Patricia Domi, have now joined the board
of directors.
Settlement Agreement
On November 15, 2001, D'Angelo, Inc. entered into a Settlement
Agreement with Stewart Garner, its former President. Under the
terms of the Agreement, D'Angelo, Inc. is to pay Mr. Garner the
sum of $70,000 in ten equal monthly payments of $7,000 each,
which is to be payble upon the 15th of each month, commencing on
November 15, 2001. D'Angelo may pay Mr. Garner one lump sum of
$60,000 at any time prior to January 15, 2002, in which case the
obligated payments shall be deemed to be paid in full.
The following table sets forth information regarding the
beneficial ownership of the shares of the Common Stock (the only
class of shares previously issued by the Company) at January 10,
2002 by (i) each person known by the Company to be the beneficial
owner of more than five percent (5%) of the Company's outstanding
shares of Common Stock, and (ii) all directors and executive
officers of the Company as a group, prior to and upon conversion
of Exchangeable Shares. Each person named in the table has sole
voting and investment power with respect to all shares shown as
beneficially owned by such person and can be contacted at the
address of the Company.
Beneficial Holdings of Owners of 5% or more the Company's common
stock:
Title of Name/Address Shares
Class of Owner Beneficially Percentage
Owned Ownership
Common Chapman & Flanagan, Ltd., In 701,257 7.68%
Trust (1)
777 N. Rainbow Blvd., Suite 390
Las Vegas, NV 89107
Common Penguin Petroleum 1,600,000 17.52%
4 Barristers Court
Thornhill, Ontario L3T 5X3
Common Total ownership of owners of 2,301,257 25.20%
5% or more
(1) Please note that the shares held in Escrow by Chapman &
Flanagan, Ltd., In Trust do not have any voting rights until they
are exhanged by the shareholders of Playandwin Canada, Inc.
pursuant to the terms of the Escrow Agreement in relation to the
spin-off of Playandwin Canada, Inc.
Beneficial Holdings of Officer and Directors:
Title of Name/Address Shares Percentage
Class of Owner Beneficially Ownership
Owned
Common Frank D'Angelo 0 0
265 Forest Hill Road
Toronto, Ontario
M5P2N3
Common Giuseppe D'Angelo 0 0
265 Forest Hill Road
Toronto, Ontario
M5P2N3
0 0
Common T. Hurdman
35 Auto Mall Drive
Scarborough, Ontario
M1B 5N5
Common 0 0
Patricia Domi
265 Forest Hill Road
Toronto Ontario
M5P 2N3
Common Stewart Garner 0 0
7050 Weston Rd.
Vaughn, Ontario
L4L 8G7
Common Total ownership of 0 0
officers and directors
Beneficial Holdings of Owners of 5% or more the Company's common
stock (upon conversion of Exchangeable Shares):
(NOTE: These shares are approximated on a pro rata basis pursuant
to their holdings in D'Angelo Brands Ltd.)
Title of Name/Address Shares Percentage
Class of Owner Beneficially Ownership
Owned
Common Frank D'Angelo 5,959,772 13.17%
265 Forest Hill Road
Toronto, Ontario
M5P2N3
Common Giuseppe D'Angelo 18,659,568 41.24%
265 Forest Hill Road
Toronto, Ontario
M5P2N3
Common Almond Resources (1) 1,579,339 3.49%
Cable Beach Courte #1
West Bay Street
P.O. Box CB-11728
Nassau, Bahamas
Common Fidra Holdings Ltd. (1) 1,787,931 3.95%
Cable Beach Court #1
West Bay Street
P.O. Box CB-11278
Nassau, Bahamas
Common Select Investments Ltd.(1) 1,728,334 3.82%
Cable Beach Court #1
West Bay Street
P.O. Box CB-11278
Nassau, Bahamas
Common Total ownership of 29,714,944 65.68%
owners of 5% or more
(1) Mr. Ian Brown is the principle shareholder of Almond
Resources Ltd., Fidra Holdings Ltd., and Select Investments Ltd.
Therefore, Mr. Brown will be deemed the beneficial owner of an
aggregated total of approximately 5,095,604 shares, or 11.26% of
the issued and outstanding shares of the common stock, upon
conversion of the Exchangeable Shares.
Beneficial Holdings of Officer and Directors (upon conversion of
Exchangeable Shares):
Title of Name/Address Shares Percentage
Class of Owner Beneficially Ownership
Owned
Common Frank D'Angelo 5,959,772 13.17%
265 Forest Hill Road
Toronto, Ontario
M5P 2N3
Common Giuseppe D'Angelo 18,659,568 41.24%
265 Forest Hill Road
Toronto, Ontario
M5P 2N3
Common T. Hurdman (1) 297,989 0.66%
35 Auto Mall Drive
Scarborough, Ontario
M1B 5N5
Common Patricia Domi 0 0
265 Forest Hill Road
Toronto Ontario
M5P 2N3
Common Stewart Garner 110,500 0.24%
7050 Weston Rd.
Vaughn, Ontario
L4L 8G7
Common Total ownership of 24,917,329 55.07%
officers and directors
Note 1: Hurdman Enterprises Ltd. will be the beneficial owner of
approximately 297,989 shares upon conversion of the Exchangeable
Shares. Muriel J. Hurdman will be the beneficial owner of
approximately 59,598 shares upon conversion of the Exchangeable
Shares. Mr. T. Lynton Hurdman is the principle shareholder of
Hurdman Enterprises Ltd. and the husband of Muriel J. Hurdman.
Therefore, Mr. Hurdman will be deemed the beneficial owner of an
aggregate of approximately 357,587 shares, or 0.79%, of the
issued and outstanding shares of common stock upon conversion of
the Exchangeable Shares. Mr. Hurdman is a director of D'Angelo.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Acquisition
On November 15, 2001, D'Angelo incorporated a wholly-owned
subsidiary named D'Angelo Acquisitions Inc., an Ontario
corporation, which entered into a Share Exchange Agreement with
D'Angelo Brands Ltd., an Ontario corporation. Pursuant to a Share
Exchange Agreement (the "Agreement"), dated November 14, 2001,
D'Angelo Brands, Inc., a Nevada corporation (the "Company"),
acquired 100% of the outstanding shares of common stock ("Common
Stock") of D'Angelo Brands Ltd., for a total of 36,000,000
Exchangeable Shares. The Exchangeable Shares to be issued by the
Purchaser pursuant to this Agreement shall be subject to the
following terms:
(a) each Exchangeable Share may be exchanged for one (1)
D'Angelo Share at any time at the request of its holder at
any time during the period ending on and including the day
of the fifth anniversary of the Closing Date;
(b) each Exchangeable Share may be exchanged for one (1)
D'Angelo Share at the request of the Purchaser:
(i) on the occurrence of a take over bid for all of the
issued and outstanding shares of D'Angelo; or
(ii) after the fifth anniversary of the Closing Date;
(d) in case D'Angelo shall: (i) subdivide its outstanding common
shares into a greater number of shares: (ii) consolidate its
outstanding common shares into a smaller number of shares:
(iii) issue common shares of D'Angelo to the holders of its
outstanding common shares by way of stock dividend then the
number of D'Angelo Shares into which the Exchangeable Shares
may be converted on the effective date of such subdivision
or consolidation or on the record date for such stock
dividend, as the case may be, shall, in the case of the
events referred to in (i) and (iii) above, be decreased in
proportion to the total number of outstanding common shares
of D'Angelo resulting from such subdivision or issue, or
shall, in the case of the event referred to in (ii) above,
be increased in proportion to the total number of
outstanding common shares of D'Angelo resulting from such
consolidation; and
(e) the adjustments provided for in subsection (d) above are
cumulative and shall apply to successive dividends,
distributions, subdivisions, consolidations, issues or other
events resulting in any adjustment under the provisions of
said subsection;
(f) all of the foregoing rights, privileges and conditions and
the exercise or fulfillment thereof shall be subject to the
relevant securities laws.
Assignment of Licenses & Spin-Off
In connection with the share exchange, D'Angelo will assign to
its wholly-owned Ontario subsidiary, Playandwin Canada Inc.
("Playandwin-Canada") all of its licenses and rights to the
racing wager game known as "RACINGO". D'Angelo will also
distribute all of its common shares of Playandwin-Canada to
shareholders of record of D'Angelo prior to the closing of the
share exchange with D'Angelo Brands as a stock dividend on the
basis of one share of Playandwin-Canada for every one share of
D'Angelo held. As a result, Playandwin-Canada will carry on
D'Angelo's RACINGO business, while D'Angelo will concentrate on
the D'Angelo Brands' business.
Stock dividends were payable November 20, 2001 to all
shareholders of record at close of business October 29, 2001.
There are currently 701,257 Class B Special Shares of Playandwin-
Canada issued and outstanding. Each of these Class B D'Angelo-
Canada shares may be exchanged for one (1) common share of
D'Angelo. The Class B Playandwin-Canada shares were issued in
1999 on the acquisition of Lynx Gaming Corp. and P.E.S.T.
Creative Gaming Corporation by D'Angelo-Canada. These shares have
not been exchanged yet. In order to honor its commitment to the
holders of the Class B Playandwin-Canada shares without obliging
the proposed new management of D'Angelo to concern itself with
the same, D'Angelo will issue a sufficient number of D'Angelo
common shares to a trustee for benefit of the holders of the
Class B Playandwin-Canada shares. The trustee will hold the
D'Angelo common shares in trust until all conditions for the
exchange of the Class B Playandwin-Canada shares have been
satisfied.
ITEM 5. OTHER INFORMATION
On November 19, 2001, Playandwin, Inc. changed its name to
D'Angelo Brands Inc.
Pursuant to the Share Exchange between the Company and D'Angelo
Brands Ltd. (Canada), the historical financial history of the
Company is that of D'Angelo Brands Ltd. (Canada), therefore, the
Company has adopted the fiscal year end of D'Angelo Brands Ltd.
of April 30.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
a) The Audited Financial Statements as of the end of most
recent fiscal year and the interim period for D'Angelo
Brands Ltd.
D'ANGELO BRANDS LTD.
FINANCIAL STATEMENTS
YEAR ENDED APRIL 30, 2001
CONTENTS
Auditors' Report 1
Balance Sheet 2
Statement of Operations 3
Statement of Cash Flows 4
Notes to Financial Statements 5 - 8
AUDITORS' REPORT
To the Shareholders of
D'Angelo Brands Ltd.
We have audited the accompanying balance sheet of D'Angelo
Brands Ltd. as at April 30, 2001 and 2000 and the related
statements of operations and cash flows for the years then ended.
These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing
standards generally accepted in the United States of America.
Those standards require that we plan and perform the audit to
obtain reasonable assurance whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, these financial statements referred to above
present fairly, in all material respects, the financial position
of D'Angelo Brands Ltd. as at April 30, 2001 and 2000 and the
results of its operations and its cash flows for the years then
ended in conformity with accounting principles generally accepted
in the United States of America.
" Solursh Feldman & Partners LLP"
Toronto, Canada CHARTERED ACCOUNTANTS
September 24, 2001
D'ANGELO BRANDS LTD.
(Incorporated under the Ontario Business Corporations Act)
Balance Sheet
April 30, 2001
<Table>
<s> <c> <c>
2001 2000
ASSETS
Current
Cash $ 11,881 $ -
Accounts receivable 76,534 23,127
Inventories - 3,093
Deposit on building 64,160 -
------------ ----------
152,575 26,220
Capital (note 5) 40,902 -
Deferred Financing Charges (note 6) 55,545 -
------------ ----------
$ 249,022 $ 26,220
============ ==========
LIABILITIES
Current
Bank indebtedness (note 7) $ - $ 2,550
Accounts payable and accrued charges 243,855 200,614
Loans payable (note 8) - 328,229
Advances - shareholders (note 9) 3,780 25,142
------------ ----------
247,635 556,535
============ ==========
STOCKHOLDERS' EQUITY
Capital Stock (note 10) 951,784 68
Deficit (984,859) (529,917)
------------ ----------
(33,075) (529,849)
Accumulated Other Comprehensive Loss 34,462 (466)
------------ ----------
1,387 (530,315)
------------ ----------
$ 249,022 $ 26,220
============ ==========
</Table>
APPROVED ON BEHALF OF THE BOARD
Director Director
D'ANGELO BRANDS LTD.
Statement of Operations
Year Ended April 30, 2001
<Table>
<s> <c> <c>
2001 2000
Sales $ 140,950 $ 668,366
Cost of Sales 62,018 612,003
------------ -----------
Gross Profit 78,932 56,363
Commission Income 298,408 279,403
------------ -----------
377,340 335,766
------------ -----------
Expenses
Selling 211,594 484,225
General and administrative 280,057 262,096
------------ -----------
491,651 746,321
------------ -----------
Loss Before the Undernoted (114,311) (410,555)
------------ -----------
Write down of prepaid expenses and
advertising production costs 320,800 -
Interest 6,020 119,362
Amortization 13,811 -
------------ -----------
340,631 119,362
------------ -----------
Net Loss (454,942) (529,917)
Deficit - beginning of year (529,917) -
------------ -----------
Deficit - end of year $ (984,859) $ (529,917)
============ ===========
</Table>
D'ANGELO BRANDS LTD.
Statement of Cash Flows
Year Ended April 30, 2001
<Table>
<s> <c>
2001
Cash Flows from Operating Activities
Net loss $ (454,942)
Amortization 13,811
------------
(441,131)
Changes in non-cash working capital
Accounts receivable (53,407)
Inventories 3,093
Accounts payable and accrued charges 43,241
------------
(448,204)
------------
Cash Flows from Investing Activities
Additions to capital assets (54,713)
Deposit on building (64,160)
Deferred financing charges (55,545)
------------
(174,418)
------------
Cash Flows from Financing Activities
Loans payable (328,229)
Advances - shareholders (21,362)
Issurance of capital stock 951,716
------------
602,125
Effect of Foreign Currency Exchange 34,928
Rates
Net Increase in Cash 14,431
Cash - beginning of year (2,550)
Cash - end of year $ 11,881
</Table>
D'ANGELO BRANDS LTD.
Notes to Financial Statements
April 30, 2001
1. Going Concern Assumption
The financial statements are prepared in accordance with
generally accepted in the United States of America accounting
principles with the assumption that the corporation will be
able to realize its assets and discharge its liabilities in
the normal course of business as a going concern.
The corporation sustained material losses in the prior year
and has a working capital deficiency. Management expects that
the corporation will become profitable in the current fiscal
year. Management has entered into negotiations to provide
working capital through a public offering. The corporations
continued existence as a going concern is dependant upon its
ability to attain and maintain profitable operations and to
complete the public offering.
2. Summary of Significant Accounting Policies
The financial statements have been prepared in accordance with
accounting principles generally accepted in the United States
of America. A summary of significant accounting policies is
set out below:
a) Capital assets and amortization
Capital assets are stated at cost or net replacement
amount. Amortization, based on the estimated useful lives
of the assets, is provided using the undernoted annual
rates and methods:
Trucks 30% Declining balance
b) Inventory
Inventories are valued at the lower of cost (first-in,
first-out busis) or market.
c) Deferred financing charges
Deferred financing charges are amortized on a
straight-line basis over five years.
d) Use of Estimates
In preparing the company's financial statements,
management is required to make estimates and assumptions
that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and
reported amounts of revenue and expenses during the
period. Actual results could differ from these estimates.
D'ANGELO BRANDS LTD.
Notes to Financial Statements
April 30, 2001
2. Summary of Significant Accounting Policies - continued
e) Foreign Currency Translation
The translation of the Financial Statements from Canadian
dollars into United States dollars is performed for the
convenience of the reader. Balance Sheet accounts are
translated using closing exchange rates in effect at the
Balance Sheet date and income and expense accounts are
translated using an average exchange rate prevailing during
each reporting period. No representation is made that the
Canadian dollar amounts could have been, or could be,
converted into United States dollars at the rates on the
respective dates and or at any other certain rates.
Adjustments resulting from the trnslation are included in
the cumulative translation adjustments in shareholders'
equity.
3. Nature of Business
The company is engaged in the wholesale and brokerage of
consumer groceries. The company was incorporated under the
Ontario Business Corporations Act on May 15, 1998 and
commenced operations on May 1, 1999.
4. Prepaid Advertising Production Costs
The company acquired finished commericals exclusively produced
for D'Angelo Brands from a shareholder for a $211,728
promissory note as described in note 11. These costs will be
amortized over three years commencing with the first broadcast
of these commercials.
5. Capital Assets
Accumulated
Cost Amortization
Trucks $ 48,120 $ 7,218
Net carrying amount $ 40,902
=========
6. Deferred Financing Charges
Accumulated
Cost Amortization
Financing charges $ 61,717 $ 6,172
Net carrying amount $ 55,545
=========
7. Bank Indebtedness
Bank indebtedness bears interest at prime plus 2% and is
secured by a general security agreement over all the assets of
the company.
D'ANGELO BRANDS LTD.
Notes to Financial Statements
April 30, 2001
8. Loans Payable
<Table>
<s> <c> <c>
2001 2000
Accounts receivable loan with Reservoir $ - $ 92,188
Capital Corporation of Canada Inc. bears
interest at prime + 6% plus a facility fee
of 1% and is secured by current accounts
receivable and a general security
agreement. Accounts not collected before
90 days are to be repurchased by the
company.
Inventory loan with Reservoir Capital - 38,889
Corporation of Canada Inc. bears interest
at prime + 6%, is secured by inventory and
a general security agreement and is
repayable the first day of each month, as
cash proceeds from sale of inventory
become available, or on demand.
Purchase order loan with Reservoir Capital - 175,240
Corporation of Canada Inc. bears interest
at prime + 6%, is secured by inventory and
a general security agreement and is
repayable 45 days after such purchase
order loans are made available.
Demand Promissory Note with The Lifeboat - 21,912
Company LLC bears interest at 24%, is
secured by a general security agreement
and matured on May 30, 1999
---------- ---------
$ - $ 328,229
========== =========
</Table>
As per an agreement dated February 27, 2001, these loans were
assumed by a shareholder related to the controlling
shareholder in return for a promissory note totaling $338,747.
The shareholder provided promissory notes and pledged shares
as security for the indebtedness.
9. Advances from Shareholder
These advances are non-interest bearing and have no specified
terms of repayment.
10. Capital Stock
Authorized
Unlimited common shares
2001 2000
Issued
50,975,000 common shares
(April 30, 2000 - 100) $ 951,784 $ 68
========== =========
During the year 50,974,900 common shares were issued for
$958,136 net of issued costs of issuance of $6,416.
D'ANGELO BRANDS LTD.
Notes to Financial Statements
April 30, 2001
11. Related Party Transactions
The company has entered into a 25 year Royalty Agreement for
the use of intellectual property (i.e. trademarks, etc.),
held by a related company under common control, which requires
the company to pay 3% of gross revenues from sales of all
products. The company is obligated to pay a minimum of
$192,360 to a maximum of $513,280 in royalties during each
calendar year. This agreement commences December 1, 2001.
During the year the company was allowed to use the
intellectual property at no cost.
The company purchased printing plates included in prepaid
expense and production advertising materials as described in
note, from a shareholder related to the controlling
shareholder in return for a $320,800 promissory note.
12. Commitments and Significant Contract
The company is committed to a 25 year royalty agreement with a
related company for the use of the intellectual property as
described in note 11.
The company entered into a Purchase and Sale Agreement with
Reagents Canada Ltd. on December 4, 2000 to purchase a
building located at 14 Brewster Road, Brampton, for
$2,021,040. The closing date of the agreement is June 29,
2001.
13. Contingent Gain
A claim was issued in the Ontario Superior Court of Justice on
August 7, 2001 on behalf of D'Angelo brands Ltd. v. Les
Aliments Lexus Foods Inc. The claim is for outstanding
commissions of $178,365 plus $320,000 in general damages for
breach of contract.
It is the opinion of Management and Legal Counsel that it is
likely that the company will succeed on its claim for
commissions and has a good case for the damages for breach of
contract. No provision has been made in these financial
statements in respect of this claim.
14. Subsequent Events
The company has entered into an agreement with PlayandWin Inc.
and its wholly-owned Ontario subsidiary D'Angelo Aquisitions
Inc. Pursuant to the agreement, D'Angelo Aquisitions Inc.
will acquire all of the issued and outstanding shares of
D'Angelo Brands Ltd. in exchange for 36,000,000 class "B"
special shares of D'Angelo Aquisition Inc. Each class "B"
special share may be exchanged for one common share of
PlayandWin Inc. at the option of the holder.
D'ANGELO BRANDS LTD.
(Incorporated under the Ontario Business Corporations Act)
Interim Balance Sheet
October 31, 2001
<Table>
<s> <c> <c>
Oct. 31 Oct. 31
2001 2000
ASSETS
Current
Cash $ 19,394 $ -
Accounts receivable 131,017 151,118
Inventories 33,577 -
Loan receivable 795,626 -
------------ ------------
979,614 151,118
Capital (note 4) 2,109,809 -
Deferred Financing Charges (note 5) 48,981 -
------------ ------------
$ 3,138,404 $ 151,118
============ ============
LIABILITIES
Current
Bank indebtedness (note 6) $ - $ 7,005
Accounts payable and accrued charges 339,435 299,087
Loans payable (note 7) - 338,405
Advances - shareholders (note 8) 56,821 92,218
------------ ------------
396,256 736,715
------------ ------------
Mortgages Payable 2,017,705
STOCKHOLDERS' EQUITY
Capital Stock (note 9) 1,747,410 65
Deficit (1,063,614) (555,420)
------------ ------------
683,796 (555,355)
Accumulated Other Comprehensive Loss 40,647 (23,242)
------------ ------------
724,443 (578,597)
------------ ------------
$ 3,138,404 $ 158,118
============ ============
</Table>
D'ANGELO BRANDS LTD.
Interim Statement of Operations
For the Three Months Ended October 31, 2001
<Table>
<s> <c> <c>
Oct. 31 Oct. 31
2001 2000
Sales $ 224,927 $ 75,182
Cost of Sales 178,456 29,239
------------- -----------
Gross Profit 46,471 45,943
Commission Income - 112,325
------------- -----------
46,471 158,268
============= ===========
Expenses
Selling 50,454 103,293
General and administrative 31,042 53,816
Financial - 16,462
------------- -----------
81,496 173,571
------------- -----------
Loss Before the Undernoted (35,025) (15,303)
------------- -----------
Interest 719 -
Amortization 11,509 -
------------- -----------
12,228 -
------------- -----------
Net Loss (47,253) (15,303)
Deficit - beginning of period (1,016,361) (540,117)
------------- -----------
Deficit - end of period $ (1,063,614) $ (555,420)
============= ===========
</Table>
D'ANGELO BRANDS LTD.
Interim Statement of Operations
For the Six Months Ended October 31, 2001
<Table>
<s> <c> <c>
Oct. 31 Oct. 31
2001 2000
Sales $ 374,879 $ 125,304
Cost of Sales 297,427 48,731
----------- ----------
Gross Profit 77,452 76,573
Commission Income - 187,208
----------- ----------
77,452 263,781
Expenses
Selling 84,090 172,155
General and administrative 51,737 89,693
Financial 27,436
----------- ----------
135,827 289,284
----------- ----------
Loss Before Undernoted ( 58,375)
Write down of Prepaid Expenses and
Advertising
Production costs -
Interest 1,198
Amortization 19,182
----------- ----------
20,380
----------- ----------
Net Loss (78,755) (25,503)
Deficit - beginning of year (984,859)
Deficit - beginning of period (529,917)
----------- ----------
Deficit - end of year $(1,063,614)
Deficit - end of period $ (555,420)
=========== ==========
</Table>
D'ANGELO BRANDS LTD.
Interim Statement of Cash Flows
For the Three Months Ended October 31, 2001
<Table>
<s> <c> <c>
Oct. 31 Oct. 31
2001 2000
Cash Flows from Operating Activities
Net loss $ (47,253) $ (15,303)
Amortization 11,509 -
------------ ------------
(35,744) (15,303)
Changes in non-cash working capital ------------ ------------
Accounts receivable (54,483) (127,991)
Inventories (33,577) 3,093
Accounts payable and accrued charges 95,580 98,473
------------ ------------
(28,224) (41,728)
------------ ------------
Cash Flows from Investing Activities
Loan receivable (795,626) -
Purchase of capital assets (2,088,089) -
Deferred finance charges 6,564 -
------------ ------------
(2,812,991) -
------------ ------------
Cash Flows from Financing Activities
Loans payable 2,017,705 10,176
Advances - shareholders 53,041 67,076
Issurance of capital stock 795,626 -
------------ ------------
2,866,372 77,252
------------ ------------
Effect of Foreign Currency Exchange Rates 6,185 (22,776)
------------ ------------
Net Increase in Cash 31,342 12,748
Cash - beginning of period (11,948) (19,753)
------------ ------------
Cash - end of period $ 19,394 $ (7,005)
============ ============
</Table>
D'ANGELO BRANDS LTD.
Interim Statement of Cash Flows
For the Six Months Ended October 31, 2001
<Table>
<s> <c> <c>
Oct. 31 Oct. 31
2001 2000
Cash Flows from Operating Activities
Net Loss (78,755) (25,503)
Adjustment for:
Amortization 19,182 --
---------- ----------
(59,573)
Changes in non-cash working capital
Accounts receivable (54,483) (127,991)
Inventories (33,577) 3,093
Accounts payable and accrued charges 95,580 98,473
---------- ----------
(52,053) (51,928)
---------- ----------
Cash Flows from Investing Activities
Loan Receivable (795,626)
Purchase of Capital Assets (2,088,089)
Deferred Finance Charges 6,564
Deposit on building 64,160
---------- ----------
(2,812,991)
---------- ----------
Cash Flows from Financing Activities
Loans Payable 2,017,705 10,176
Advances - shareholders 53,041 67,076
Issuance of Capital Stock 795,626
---------- ----------
2,866,372 77,252
---------- ----------
Effect of Foreign Currency Exchange 6,815 (466)
Rates
---------- ----------
Net Increase in Cash 7,513 24,858
Cash - beginning of period 11,881 (31,863)_
---------- ----------
Cash - end of period 19,394 (7,005)
---------- ----------
</Table>
D'ANGELO BRANDS LTD.
Notes to Financial Statements
October 31, 2001
1. Going Concern Assumption
The financial statements are prepared in accordance with
generally accepted in the United States of America accounting
principles with the assumption that the corporation will be
able to realize its assets and discharge its liabilities in
the normal course of business as a going concern.
The corporation sustained material losses in the prior year
and has a working capital deficiency. Management expects that
the corporation will become profitable in the current fiscal
year. Management has entered into negotiations to provide
working capital through a public offering. The corporations
continued existence as a going concern is dependant upon its
ability to attain and maintain profitable operations and to
complete the public offering.
2. Summary of Significant Accounting Policies
The financial statements have been prepared in accordance with
accounting principles generally accepted in the United States
of America. A summary of significant accounting policies is
set out below:
a) Capital assets and amortization
Capital assets are stated at cost or net replacement
amount. Amortization, based on the estimated useful lives
of the assets, is provided using the undernoted annual
rates and methods:
Building 4% Declining balance
Trucks 30% Declining balance
b) Inventory
Inventories are valued at the lower of cost (first-in,
first-out busis) or market.
c) Deferred financing charges
Deferred financing charges are amortized on a
straight-line basis over five years.
d) Use of Estimates
In preparing the company's financial statements,
management is required to make estimates and assumptions
that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and
reported amounts of revenue and expenses during the
period. Actual results could differ from these estimates.
D'ANGELO BRANDS LTD.
Notes to Financial Statements
October 31, 2001
2. Summary of Significant Accounting Policies - continued
e) Foreign Currency Translation
The translation of the Financial Statements from Canadian
dollars into United States dollars is performed for the
convenience of the reader. Balance Sheet accounts are
translated using closing exchange rates in effect at the
Balance Sheet date and income and expense accounts are
translated using an average exchange rate prevailing during
each reporting period. No representation is made that the
Canadian dollar amounts could have been, or could be,
converted into United States dollars at the rates on the
respective dates and or at any other certain rates.
Adjustments resulting from the translation are included in
the cumulative translation adjustments in shareholders'
equity.
3. Nature of Business
The company is engaged in the wholesale and brokerage of
consumer groceries. The company was incorporated under the
Ontario Business Corporations Act on May 15, 1998 and
commenced operations on May 1, 1999.
4. Capital Assets
Accumulated
Cost Amortization
Land and building $ 2,068,907 $ -
Trucks $ 48,120 $ 7,218
============== ===========
Net carrying amount $ 2,109,809
===========
5. Deferred Financing Charges
Accumulated
Cost Amortization
Financing charges $ 61,717 $ 12,736
========== ==========
Net carrying amount $ 48,981
==========
6. Bank Indebtedness
Bank indebtedness bears interest at prime plus 2% and is
secured by a general security agreement over all the assets of
the company.
D'ANGELO BRANDS LTD.
Notes to Financial Statements
October 31, 2001
7. Loans Payable
2001 2000
Accounts receivable loan with $ - $ 94,256
Reservoir Capital Corporation of
Canada Inc. bears interest at
prime + 6% plus a facility fee of
1% and is secured by current
accounts receivable and a general
security agreement. Accounts not
collected before 90 days are to be
repurchased by the company.
Inventory loan with Reservoir - 39,989
Capital Corporation of Canada Inc.
bears interest at prime + 6%, is
secured by inventory and a general
security agreement and is
repayable the first day of each
month, as cash proceeds from sale
of inventory become available, or
on demand.
Purchase order loan with Reservoir - 179,756
Capital Corporation of Canada Inc.
bears interest at prime + 6%, is
secured by inventory and a general
security agreement and is
repayable 45 days after such
purchase order loans are made
available.
Demand Promissory Note with The - 24,404
Lifeboat Company LLC bears
interest at 24%, is secured by a
general security agreement and
matured on May 30, 1999
----------- ----------
$ - $ 338,405
=========== ==========
As per an agreement dated February 27, 2001, these loans were
assumed by a shareholder related to the controlling
shareholder in return for a promissory note totalling
$338,747. The shareholder provided promissory notes and
pledged shares as security for the indebtedness.
8. Advances from Shareholder
These advances are non-interest bearing and have no specified
terms of repayment.
9. Capital Stock
Authorized
Unlimited common shares
2001 2000
Issued
60,405,000 common shares
(October 31, 2000 - $ 951,784 $ 65
100)
============ ==========
D'ANGELO BRANDS LTD.
Notes to Financial Statements
October 31, 2001
10. Related Party Transactions
The company has entered into a 25 year Royalty Agreement for
the use of intellectual property (i.e. trademarks, etc.),
held by a related company under common control, which requires
the company to pay 3% of gross revenues from sales of all
products. The company is obligated to pay a minimum of
$192,360 to a maximum of $513,280 in royalties during each
calendar year. This agreement commences December 1, 2001.
During the year the company was allowed to use the
intellectual property at no cost.
The company purchased printing plates included in prepaid
expense and production advertising materials as described in
note , from a shareholder related to the controlling
shareholder in return for a $320,800 promissory note.
11. Commitments and Significant Contract
The company is committed to a 25 year royalty agreement with a
related company for the use of the intellectual property as
described in note 10.
The company entered into a Purchase and Sale Agreement with
Reagents Canada Ltd. on December 4, 2000 to purchase a
building located at 14 Brewster Road, Brampton, for
$2,021,040. The closing date of the agreement is June 29,
2001.
12. Contingent Gain
A claim was issued in the Ontario Superior Court of Justice on
August 7, 2001 on behalf of D'Angelo brands Ltd. v. Les
Aliments Lexus Foods Inc. The claim is for outstanding
commissions of $178,365 plus $320,000 in general damages for
breach of contract.
It is the opinion of Management and Legal Counsel that it is
likely that the company will succeed on its claim for
commissions and has a good case for the damages for breach of
contract. No provision has been made in these financial
statements in respect of this claim.
13. Subsequent Events
The company has entered into an agreement with PlayandWin Inc.
and its wholly-owned Ontario subsidiary D'Angelo Aquisitions
Inc. Pursuant to the agreement, D'Angelo Aquisitions Inc.
will acquire all of the issued and outstanding shares of
D'Angelo Brands Ltd. in exchange for 36,000,000 class "B"
special shares of D'Angelo Aquisition Inc. Each class "B"
special share may be exchanged for one common share of
PlayandWin Inc. at the option of the holder.
b) Prior to the acquisition of D'Angelo Brands, Ltd.,
D'Angelo had minimal assets and revenues during the
fiscal year end. The pro-forma financial statements,
which serve to state the results of the fiscal year end
as if the two companies had combined operations, will
not differ in any material way from the audited
financial statements of D'Angelo Brands, Ltd. The
Company will not, therefore, include separate pro-forma
financial statements.
EXHIBITS
2.1 Share Exchange Agreement (incorporated by
reference to Exhibit 2.1 to the Company's
Current Report on Form 8-K filed with the
Commission on January 15, 2002).
3.1 Certificate of Amendment re Name Change
(incorporated by reference to Exhibit 3.1 to
the Company's Current Report on Form 8-K
filed with the Commission on January 15,
2002).
10.1 Assignment of Licenses to Playandwin Canada
Inc. from Playandwin Inc. (incorporated by
reference to Exhibit 10.1 to the Company's
Current Report on Form 8-K filed with the
Commission on January 15, 2002).
10.2 Settlement Agreement between Stewart Garner
and Playandwin Inc. (incorporated by
reference to Exhibit 10.2 to the Company's
Current Report on Form 8-K filed with the
Commission on January 15, 2002).
10.3 Declaration of Trust and Escrow Agreement
(incorporated by reference to Exhibit 10.3 to
the Company's Current Report on Form 8-K
filed with the Commission on January 15,
2002).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly
authorized.
D'Angelo Brands, Inc.
By: /s/ Frank D'Angelo
Frank D'Angelo, President
Date: February 26, 2002